When people are torn between buying a new home and a plot of land, they often miss out on the different loan options to consider. It may seem that you just need to think of the property loan when looking at properties for sale in Pune. But the truth is, you need to take a close look at the differences before you opt for a loan.
Land Loan Vs Home Loan: What Is the Difference?
There is a basic difference between a home loan and a land loan. Home loans are for those properties that will be constructed, are under construction, or are already built-up homes. Be it an independent villa or a flat in an apartment complex – home loans can be used for both.
Land loans or plot loans, as the name suggests, are for purchasing a plot of land to build a residential property. If you haven’t decided which plots for sale in Pune you want to invest in, you can opt for land loans.
Before you apply for one of the two loans, consider the following points of difference:
When buying a plot, choose one that is located within the municipality or corporation limits. For your home, you can pick any property of your choice, no matter its location.
Loan-to-Value (LTV)/Loan-to-Cost (LCR) Ratio
The LTV/LCR ratio is the amount of loan you can get against the cost of the property. For a plot loan, you can avail up to 80% LTV ratio; for a home loan, the ratio can be as high as 90% depending on the lender.
If you’re looking at land for sale in Pune, your loan tenure can go up to 15 years. On the other hand, the duration of the tenure can be as long as 30 years for home loans.
When it comes to tax benefits, you stand to gain deductions for a home loan – both on the principal and interest amounts. However, no tax deductions are applicable on land loans. To avail any tax benefits, you must construct a house on the plot of land.
What Are the Similarities?
Though they are different, the due diligence process, the available EMI options, and rules for co-applicants continue to be the same for land and home loans. Your credit score also plays an essential role in both the loan applications.
If you’re looking at land for investment, you can explore the premium gated bungalow plots in Pune by Banyan Tree Realty. Located near the Pune-Mumbai Expressway, you can find a range of exquisite homes spread out across wide plots of land.